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NonProfit Trading Subsidiaries Might Be Eligible For Charitable Status

Mon Feb 08 2021

Scottish NonProfit subsidiaries that themselves operate for-profit, might be able to claim charitable status after a recent ruling

Subsidiaries of charities that themselves turn a profit in Scotland, may, from last week, be able to claim charitable status after a four year legal battle came to a close.

 

The New Lanark Trust (responsible for a former 18th Century village in South Lanarkshire, built around a cotton mill, which is a Unesco World Heritage Site) pursued a case through the Scottish courts and received a ruling from the Court of Session last week which stated that the charities subsidiaries, New Lanark Hotels and New Lanark Trading, could be recognised as charities as they existed for the sole purpose of supporting their parent company’s charitable goals.

 

The decision was welcomed by the Scottish Charity regulator who’d previously refused to grant the organisations charitable status as it means the trust can now try to reclaim over £650,000 it’s paid in non-domestic rates since 2015 and seek confirmation that mandatory and discretionary rates will be applied to itself in the future.

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This provides much-needed clarity to our legal and financial status. If and when the trust is reimbursed it will provide a much-needed boost in difficult times. The OSCR said it had registered New Lanark Hotels Limited and New Lanark Trading Limited as Scottish charities.

Scott McCauley - Chief Executive, New Lanark Trust

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Charities in Scotland qualify for mandatory business rate relief of 80%, with many local authorities choosing to offer the remaining 20% on a discretionary, case by case, basis.

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OSCR’s intention in bringing the appeal was to clarify the position in respect of its guidance on public benefit in charities. We are pleased that the court has clarified that charitable status for these companies is in accordance with OSCR’s public benefit guidance.

OSCR spokesperson

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Mon Feb 08 2021

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